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The Status of Global Retirement Savings: Taking Stock, Moving Forward

By Dan Waters

December 20, 2013

Around the world, as systems for building retirement resources come under increasing pressure, countries of every size and economic situation are facing long-term savings challenges. To meet these challenges, it is critical that pension industry experts, policymakers, and fund industry representatives learn from one another and share solutions that put the needs of savers first.

This is why ICI Global hosted the Global Retirement Savings Conference: The Role of Investment Funds on 26–27 June 2013 in Hong Kong.

We organized the conference to:

Foster an international dialogue about the long-term savings issues facing jurisdictions worldwide

Examine the rise and evolution of defined contribution (DC) systems in response to those issues

Explore how investment funds are uniquely positioned to serve investors in such systems

More than 100 people representing 13 countries attended the event, including fund industry representatives, world-renowned industry experts, representatives of media outlets, and key government officials and regulators. The ideas and insights that emerged from these different panels and discussions are documented in a newly-issued report summarizing the discussion, titled Insights from the Global Retirement Savings Conference.

Despite the fact that current DC systems vary from country to country—which is to be expected, given that each country has its own unique history, institutions, characteristics, and needs—during the conference it became obvious that many countries are looking toward DC systems to help address their retirement challenges.

Over the course of the two-day event, which featured three keynote speakers and four panels of international experts, five key questions emerged that countries around the world are asking when considering retirement challenges:

1.

When thinking about retirement and the length of time in retirement, how are countries and individuals grappling with the adequacy of benefits and sustainability of systems?

2.

Should the retirement system redistribute resources? What is the proper balance between policies that encourage or even require individuals to set aside resources for their own use in retirement, and policies that redistribute resources to individuals in greatest need (either from current workers to current retirees or from higher-earning workers to lower-earning workers)?

3.

What role do investment funds—such as registered funds in the United States, UCITS funds in Europe, or other similar funds throughout the world—play in DC systems today? What role could they play in the future?

4.

Should the components of a national retirement system be completely mandatory, completely voluntary, or a mix of both?

5.

To the extent that a retirement system allows individual choice, what policies should be pursued to increase financial literacy?

There were no single, global answers to these questions, because governments, financial services, companies, and individuals are taking a variety of approaches to long-term savings challenges. This adaptability and diversity of responses is extremely important—and the flexibility offered by DC plans makes it easier to create a tailored, culturally-specific response.

ICI Global is committed to advancing the dialogue about how to improve retirement security worldwide. Insights from the Global Retirement Savings Conference offers perspectives on how different countries are responding to the saving challenge, assesses trends across countries, and discusses proposals for change going forward. Addressing global retirement savings issues is a daunting challenge, but my hope is that the information shared at this groundbreaking conference will help stakeholders take the next steps toward meeting that challenge.

America’s Retirement System Is Strong

By Sarah Holden

December 18, 2013

One year ago, ICI released its landmark study, The Success of the U.S. Retirement System, a compilation of research from a wide range of sources, which found that the country’s retirement system is fostering economic security in retirement for Americans across all income levels.

ICI’s Guide to Avoiding a Common 401(k) Tax Trap

By Mike McNamee

December 9, 2013

A tax trap for retirement savings is catching many smart people unaware. If allowed to go unchecked, it could harm the retirement savings of millions of Americans. A columnist for the Washington Post was just the latest in a long list of victims.

Money Market Funds and the Debt Ceiling: What Do We Know?

By Brian Reid

October 14, 2013

As the U.S. Treasury reaches the limits of its borrowing authority this week, markets and the media are focusing on the risk that the United States will default on its debt and fail to pay interest or principal on maturing Treasury securities, perhaps before the end of October.

Getting the Facts Right on Money Market Funds

By Paul Schott Stevens

September 18, 2013

This week, I testified before Congress at a hearing on the issue of money market funds and recent regulatory proposals from the Securities and Exchange Commission (SEC) that would amend the rules governing these funds.

The hearing provided an excellent opportunity to continue to educate Congress on the benefits that money market funds bring to investors and to the economy as a whole. In my testimony, I emphasized the Institute’s views on making sure that regulatory proposals do not upset the crucial role that money market funds play.

Marginal Tax Rates and the Benefits of Tax Deferral

By Peter Brady

September 17, 2013

Second in a series of posts about retirement plans and the policy proposals surrounding them.

In a previous Viewpoints post, I discussed the difference between tax deferral—the tax treatment applied to retirement savings—and tax deductions and exclusions, such as the mortgage interest deduction or the exclusion of employer-paid health insurance premiums from income. The difference is often overlooked or misunderstood, leading to inaccurate analysis and harmful policy proposals.

Retirement Plan Contributions Are Tax-Deferred—Not Tax-Free

By Peter Brady

September 16, 2013

First in a series of posts about retirement plans and the policy proposals surrounding them.

In today’s fiscal and political climate, taxes are never far from politicians’ minds. Whether to achieve comprehensive tax reform or to raise revenue to meet budget deficits, members of Congress are now considering changes to a range of tax code provisions—including those governing retirement policy. Any comprehensive effort to address fiscal policy or tax reform should examine every option, but some discussions of retirement policy have been misguided. The tax treatment of retirement savings—tax deferral— too often has been lumped together with tax deductions (such as the deduction from income of mortgage interest expense) and tax exclusions (such as the exclusion from income of employer-provided health insurance premiums).

A Step in the Right Direction on FTTs

By Keith Lawson

September 10, 2013

In a noteworthy development for anyone following the debate around financial transaction taxes (FTTs), the Council of the European Union Legal Service has issued a legal opinion regarding the FTT proposal under consideration by some EU member countries.

Get a Closer Look at Closed-End Funds

By Daniel Schrass

Check the Facts: Funds Engage Actively on Corporate Governance

By Ianthé Zabel

July 19, 2013

ICI president and CEO Paul Schott Stevens recently sent the following letter to the New York Times:

Every mutual fund or other registered investment company is required by law to cast votes on proxy proposals in the interests of the fund and its investors. Generally, funds interpret this to mean that they should support proposals that will promote good corporate governance and increase the value of the funds’ investments, carefully weighing shareholder interests and fund objectives.

Fact Checking the Media on Money Market Funds

By Mike McNamee

June 7, 2013

The media has heavily covered the unanimous vote by the Securities and Exchange Commission (SEC) to proceed with another round of regulatory changes for money market funds. In digesting this coverage, readers and journalists alike should make sure they have solid facts about money market funds. They also should be on guard for errors and omissions that tend to recur in stories and commentary on this issue.

By Paul Schott Stevens

June 6, 2013

John Authers’s recent Financial Times column (“Time to Throw Some Light on Shadow Banking”) provides an incomplete view of the recent history of U.S. money market funds and regulatory action around these funds. Readers need more facts.

GMM Panelists Discuss Retirement Savings and Financial Education

By Miriam Bridges

May 17, 2013

Americans need greater access to savings vehicles and better financial education to help ensure that they use them effectively, fund industry experts told attendees at the 55th Annual General Membership Meeting.

By Stephanie Ortbals-Tibbs

GMM Panelists Share Tips on Strengthening Cybersecurity

By Andrew Gillies

May 7, 2013

Cybersecurity gained prominence as a topic of discussion at ICI’s General Membership Meeting (GMM), held last week in Washington, DC. “Hugely important,” said Mary John Miller, the Treasury Department’s under secretary for domestic finance, in her GMM remarks.

Operations and Technology Leadership Roundtable

By Andrew Gillies

May 6, 2013

Superstorm Sandy and the April 15 terrorist attack in Boston rattled assumptions and recalibrated thinking about disaster management, agreed panelists at the Leadership Roundtable of ICI’s 2013 Operations and Technology Conference on May 2 in Washington.

By Rachel McTague

May 3, 2013

In a speech at ICI’s General Membership Meeting today, Securities and Exchange Commission (SEC) Chairman Mary Jo White highlighted the myriad ways that the SEC, in light of an increasingly global regulatory environment, pursues its mission to protect U.S. investors and markets and to promote capital formation.

By Andrew T. Gillies

GMM Policy Forum

By Andrew T. Gillies

May 1, 2013

Addressing America’s fiscal challenges will require both raising revenue and cutting government spending, said Mary John Miller, the U.S. Treasury Department’s Under Secretary for Domestic Finance, at the Policy Forum of ICI’s 55th annual General Membership Meeting (GMM).

Americans Support Their 401(k)s

By Mike McNamee

April 25, 2013

It’s pretty obvious to anyone who reads ICI Viewpoints that we believe 401(k) plans are a successful part of an overall retirement system that is working for working—and retired!—Americans. But we’re far from the only ones who think so. Surveys show that Americans share this confidence in the 401(k) and support the key features of 401(k)s and other defined contribution (DC) plans.

The Facts on Fees and 401(k)s

By Mike McNamee

FTT Would Shut Financial Institutions in Participating Countries Out of Repo Market

By Shelly Antoniewicz and Peter Brady

April 22, 2013

The European Commission has proposed imposing a 0.1 percent (10 basis points) levy on financial transactions. As ICI has detailed, this financial transaction tax (FTT) would have a host of negative consequences, including harm to investors and extraterritoriality.

The Facts on Limited Access to Retirement Funds Before Retirement

By Mike McNamee

April 22, 2013

One of the many strengths of the 401(k) system is its flexibility. Policymakers have built into 401(k) plans a careful mix of incentives that help workers save and preserve their savings for retirement—while still allowing limited access to their funds, in case of need, through hardship withdrawals and loans.

401(k) Plans Work in a Balanced Approach to Retirement Security

By Mike McNamee

No Accident: The Strengths of the 401(k) System

By Mike McNamee

April 18, 2013

Americans have saved $5.1 trillion dollars in 401(k) and other defined contribution (DC) retirement plans—plus another $5.4 in individual retirement accounts (IRAs) that are funded largely by assets rolled over from DC and other employer retirement plans.

IRA Rollovers Serve Investors Well

By David Abbey and Sarah Holden

April 12, 2013

The U.S. Department of Labor (DOL) is preparing to reintroduce its controversial proposal to revise the long-standing definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA).

Individual Investors Will Be Harmed by Financial Transaction Taxes

By Keith Lawson

Narrowing the Focus to Prime Money Market Funds

By Brian Reid

March 25, 2013

One of ICI’s key points in our responses to recent policy proposals for money market funds is that no case can be made for applying fundamental changes to Treasury, government, and tax-exempt money market funds.

One Size Does Not Fit All in Regulation of Financial Benchmarks

By Robert C. Grohowski, Mara Shreck, and Giles Swan

March 1, 2013

Following controversy surrounding calculation of the London Interbank Offered Rate (LIBOR), international regulators are closely scrutinizing the methodology, use, and oversight—among other issues—of financial benchmarks.

Ianthé Zabel

February 12, 2013

Today, ICI made the following statement in response to a comment letter on money market fund reforms filed with the Financial Stability Oversight Council (FSOC) by the presidents of the 12 regional Federal Reserve banks.

ICI Global Welcomes Improvements in Final FATCA Regulations

By Ianthe Zabel

Securities Lending and Repos: FSB Intrudes on Areas Best Left to National Regulators, Market Forces

By Robert C. Grohowski and Giles Swan

January 17, 2013

The Financial Stability Board (FSB), the international body established by the G20 to promote coordination among authorities responsible for financial stability, has made a number of recommendations toward creating a global policy framework for the securities lending and repurchase agreement (repo) markets.

The Reasonable Balance of the 2010 Reforms for Money Market Funds

By Sean Collins and Chris Plantier

January 15, 2013

Financial intermediaries—banks, hedge funds, insurance companies, investment companies, and private equity companies—exist to bring together those who have excess funds with those who need funds. This process naturally entails risk.